For four of the five of the largest publicly traded consumer publishers in the U.S., sales in the January–June period this year were higher than in the same period last year. (In the first six months of 2016, sales for all five companies were lower than in the comparable period of 2015.) In general, publishers reported higher sales of print books and downloadable audio, while e-book sales continued to slump. With no new titles making big splashes in the first six months of the year, several companies pointed to the importance of backlist in lifting sales.
Commenting on Penguin Random House’s first-half financial results (which were released August 31), CEO Markus Dohle called backlist sales “the core economic engine of our company” and said they have been enhanced by “our data-driven approach to increasing the online visibility of our books.” PRH’s biggest-selling title in the first half of 2017 was Thirteen Reasons Why, which was originally published in 2007 but benefited from this year’s Netflix series adaptation. The title sold more than one million copies across all formats in the January–June period. Also in the first six months of the year, Dr. Seuss books sold more than five million copies. Frontlist sales were led by Camino Island and Into the Water.
Total revenue at PRH in the first half of 2017 was €1.53 billion ($1. 81 billion), 1.1% higher than in the first six months of 2016. Gains in print sales and audio were enough to offset what Dohle called “the continuing general trend in lower demand for e-books.” Earnings rose 11.4%, and PRH parent company Bertelsmann attributed the improvement to the continued benefits from the Penguin-Random House merger.
HarperCollins was the only one of the five publicly traded houses to report a decline in sales compared to the first six months of 2016, and it was the only company that saw profits decline in the period. An extra week of sales in the second quarter of calendar year 2016—which generated $19 million in revenue—was one factor in the sales drop, as was the negative impact of foreign currency fluctuations and lower sales in the children’s division. The decline was partially offset by strong sales in the general books division. Like PRH, HC had gains in downloadable audio in the first half of 2017, while e-book sales fell.
Hachette Book Group USA was an important contributor to the 5.1% increase in sales at Lagardère Publishing. Sales at HBG rose 5.4%, thanks to a good performance by the publisher’s Nashville division plus frontlist sales driven by The Fix and The Black Book. The 5.4% sales increase does not include the contribution from the Perseus book division, which HBG bought in March 2016.
Simon Schuster had a double-digit increase in sales in the first half of the year, driven by growth in print book and digital audio sales. Sales of digital audio were up 34% from the first six months of 2016, SS CEO Carolyn Reidy said. The increase in audio offset a decline in e-book sales, and total digital revenue was flat in the first half of 2017. Sales growth benefited from the November 2016 purchase of Adams Media.
The Houghton Mifflin Harcourt trade division was the only publisher to report higher e-book sales in the first half of 2017 than in the first half of 2016. That was due in part to demand for The Handmaid’s Tale, which had solid sales in all formats, boosted by the Hulu adaptation. Tale also helped to lift sales of backlist titles. Overall, HMH had a 12.6% increase in revenue in the period and posted a profit, after having a loss of $3.4 million in the first half of 2016.
With a good, if not great, first half of 2017 behind them, publishers are cautiously optimistic about the remainder of the year. In his letter to PRH employees about the first half results, Dohle pointed to PRH’s strong list for the second half of the year, but cautioned that “we face a marketplace heavy with unrelenting new-title competition each week and a crowded media landscape with constantly breaking news and attention-grabbing headlines.”
Operating Performance January–June
($ and € in millions)2016 2017 Change HarperCollins Total Sales $791.0 $781.0 -1.3% EBITDA $86.0 $76.0 -11.6% Margin 10.9% 9.7% Houghton Mifflin Harcourt Trade Total Sales $70.2 $79.0 12.6% Adjusted EBITDA ($3.4) $2.3 — Margin -4.8% 2.9% Lagardère Publishing Total Sales €970.0 €1,019.0 5.1% Recurring EBIT €36.0 €41.0 13.9% Margin 3.7% 4.0% Penguin Random House Total Sales €1,516.0 €1,532.0 1.1% Operating EBITDA €185.0 €206.0 11.4% Margin 12.2% 13.4% Simon Schuster Total Sales $332.0 $367.0 10.5% Adjusted EBITDA $39.0 $42.0 7.7% Margin 11.7% 11.4%